Companies rethinking China as Biden limits investments. Major companies are restructuring their operations in China in response to growing scrutiny from both Beijing and Washington. (Axios)

Deflation: Why falling prices in China raise concerns. China's economy has slipped into deflation as consumer prices declined in July for the first time in more than two years. (BBC)

IEA sees risk of even higher oil prices this year. Oil prices have soared about 20% since late June but they could go even higher this year if the OPEC+ alliance sticks to its policy of restraining crude production, the International Energy Agency (IEA) said Friday. (CNN Business)

Ukraine to open ‘humanitarian corridor’ for ships stuck in Black Sea ports. Ukraine’s navy warned that military threats from Russia and sea mines remain along all shipping routes. (Al Jazeera)

Wholesale inflation in US edged up in July from low levels. Wholesale prices in the United States picked up slightly in July yet still suggested that inflationary pressures have eased this year since reaching alarming heights in 2022. (AP)

Italian banks hit with surprise windfall tax. Italy has passed a one-off 40% tax on the profits banks earn from higher interest rates, in a shock move that has seen shares plummet. (BBC)

Startup nation no more? Investments plunge as Israel pushes on with judicial overhaul. Almost every weekend for more than 30 weeks, tens of thousands of Israelis have taken to the streets of Tel Aviv to protest against government plans to weaken the judiciary and chip away at the independence of the Supreme Court. (CNN Business)

Will trade in rupees with India benefit Bangladesh? The new arrangement will definitely benefit India. But its benefits for Bangladesh are questionable, experts say. (Al Jazeera)

WSP profit, revenue, backlog jump. CEO and President Alexandre L’Heureux said the company’s second quarter performance surpassed expectations, despite inflation and labor challenges. (Construction Dive)

Top regulators defend stricter merger guidelines, call ‘hysteria’ overblown. Two of the nation’s top corporate regulators on Thursday defended new guidelines on merger enforcement that have attracted pushback from the business community. (CNBC)

Exclusive: Bank of England will probably need to raise rates again, Ramsden says. The Bank of England will probably have to raise interest rates further from their current 14 year-high to tackle inflation pressures that are gaining a foothold in Britain's economy, BoE Deputy Governor Dave Ramsden said. (Reuters)

Mexico's July inflation at highest level since 2000. Mexican annual inflation reached its highest level in nearly 22 years in July, official data showed on Tuesday, rising faster than expected and fueling expectations that the central bank will raise the country's benchmark interest later this week. (Reuters)

Afghan central bank lacks independence from Taliban: US watchdog. It lacked independence from the Taliban, had deficiencies in anti-money laundering and countering ‘terrorism’ financing. (Al Jazeera)

UBS ends billions in taxpayer-funded support that paved way for Credit Suisse takeover. Swiss taxpayers are off the hook from a government-engineered rescue plan that doled out billions to help UBS, the country’s largest bank, take over its ailing rival Credit Suisse. (AP)

How to Mitigate Risk When Onboarding International Customers

Kendall Payton, editorial associate

The onboarding process plays a crucial role when accepting international customers. Cultural barriers, time zones and clear communication practices are just a few considerations to make. But before making it to the onboarding stage, there are three important factors to pay attention to in order to protect your company.

One factor to consider is the cross-border risks involved with credit applications. A common misconception by many credit professionals is the idea of a one size fits all credit application. When selling across borders, you may have to create specific credit applications to a specific country. “Credit applications that are standalone documents may not be customary in some countries,” said Edwin Bell, Ph.D., CBA, ICCE, former credit manager. “They may be combined with other documents such as a sales contract or purchase agreement.”

Because there is no specific standard for gathering correct credit information, your credit application or agreement must adapt to circumstances such as a country’s local jurisdictional laws and regulations, for example. In most cases, if you do not have a signed credit application on file by the company, it will be nearly impossible to collect.

Knowing your customer’s financial information is a crucial piece to the puzzle. It is important to know the legal name of their company, where the customer does business and the area of jurisdiction they are based out of. Some countries require financial information such as Europe, but other countries may not have a standard format to require any financial information at all—which is a big red flag.

Third-party software can help with managing requirements needed in a credit application. “Managing various needs from credit applications with security devices available in Europe make a difference because you don’t want to be balancing the needs of one country versus another,” said Scott Chase, CCE, CICP, global director of credit at Gibson Brands, Inc. (Nashville, TN). “Domestically, we don’t have those issues between states in comparison to Europe across different countries in terms of needs and requirements from a security standpoint. I think it’s important to figure out wherever you’re doing that business, how you manage that.”

However, other countries may not be up to speed technologically. For example, in Mexico, electronic applications are provided under law but the culture has not quite caught up yet. The judges want to see the fresh ink and printed document, said Romelio Hernandez, president of HMH Legal. “Proving electronic data messages is challenging because you need to offer expert witnesses informatics and the actual computer where the electronic data messages are stored, which can be a large expense in some cases,” Hernandez said. “The way to avoid those situations is just to have your customer sign a written document. Sometimes, if it’s a significant transaction, we’ll suggest for them to ratify that document before a notary public.”

Credit applications serve two main purposes when it comes to international customer onboarding. One is to gather an adequate amount of financial and general information about the customer—flagging any issues before they get on board. Another is to establish terms and conditions of sale.

Hernandez said he typically suggests clients to include terms of sale in a non-intimidating way.  “In reference to Mexico, if the credit application is done electronically or through email, it may not be as effective,” he said. “You can sign legally through Adobe, but it has to be issued specifically by the central bank.”

The information for this article came from a live 2023 Credit Congress session on Effectively Onboarding International Customers. Visit our website to access FCIB resources for all your international trade needs.

 

Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate